Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework

Mathias Trabandt

No 2003,41, SFB 373 Discussion Papers from Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes

Abstract: Mankiw and Reis (2002) have proposed sticky information as an alternative to Calvo sticky prices in order to model the conventional view that i) inflation reacts with delay and gradually to a monetary policy shock, ii) announced and credible disinflations are contractionary and iii) inflation accelerates with vigorous economic activity. We develop a fully-fledged DSGE model with sticky information and compare it to Calvo sticky prices, allowing also for dynamic inflation indexation as in Christiano, Eichenbaum and Evans (2001). We find that both models do equally well in delivering the conventional view.

Keywords: sticky information; sticky prices; inflation indexation; DSGE (search for similar items in EconPapers)
JEL-codes: E0 E3 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2007)
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2007)
Working Paper: Sticky Information vs. Sticky Prices: A Horse Race in a DSGE Framework (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb373:200341

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